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(b) requests L1’s primary water undertaker to permit L1 to
introduce that water into the primary water undertaker’s
supply system,

and the premises in issue are in the area of the primary water
5undertaker.

A request under paragraph (a) may only be made to a water
undertaker whose area is wholly or mainly in England.

A request under paragraph (a) may only be made to a water
undertaker whose area is wholly or mainly in England.

(2) 10This section also applies where a water supply licensee with a
wholesale authorisation (“L2”)—

(a) requests a water undertaker whose area is wholly or mainly
in Wales and which is not L2’s primary water undertaker (the
“secondary water undertaker”) to provide a supply of water
15so that L2 may supply water to particular premises, using the
primary water undertaker’s supply system and in
accordance with L2’s retail authorisation so far as that
authorisation relates to L2’s customers, and

(b) requests L2’s primary water undertaker to permit L2 to
20introduce that water into the primary water undertaker’s
supply system,

and the premises in issue are in the area of the primary water
undertaker.

(3) This section also applies where a water supply licensee with a
25wholesale authorisation (“L3”)—

(a) agrees with a water undertaker whose area is wholly or
mainly in Wales and which is not L3’s primary undertaker
(the “secondary water undertaker”) for the secondary water
undertaker to provide a supply of water so that water may be
30supplied to particular premises, using the primary water
undertaker’s supply system and in accordance with—

(i) L3’s retail authorisation except so far as that
authorisation relates to L3’s customers, or

(ii) a retail authorisation other than L3’s, and

(b) 35requests L3’s primary water undertaker to permit L3 to
introduce that water into the primary water undertaker’s
supply system,

and the premises in issue are in the area of the primary water
undertaker.

(4) 40This section also applies where a water supply licensee with a
supplementary authorisation (“R”)—

(a) requests a water undertaker other than R’s primary water
undertaker (the “secondary water undertaker”) to provide a
supply of water so that R may supply water to particular
45premises, using the primary water undertaker’s supply
system and in accordance with R’s restricted retail
authorisation, and

(b) requests R’s primary water undertaker to permit R to
introduce that water into the primary water undertaker’s
50supply system,

and the premises in issue are in the area of the primary water
undertaker.

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A request under paragraph (a) may be made to a water undertaker
whose area is wholly or mainly in England or Wales.

A request under paragraph (a) may be made to a water undertaker
5whose area is wholly or mainly in England or Wales.

(5) Where this section applies by virtue of subsection (1), (2) or (4), the
secondary water undertaker must in accordance with a section 66D
agreement—

(a) take such steps in respect of its supply system as may be
10provided for in that agreement in order to enable it to provide
the requested supply, and

(b) having taken such steps, provide that supply.

(6) Where this section applies, the primary water undertaker must in
accordance with a section 66D agreement—

(a) 15take such steps—

(i) for the purpose of connecting the secondary water
undertaker’s supply system with the primary water
undertaker’s supply system, or

(ii) in respect of its supply system,

20as may be provided for in that agreement in order to enable
L1, L2, L3 or R to make the requested introduction of water
into the primary undertaker’s supply system, and

(b) having taken such steps, permit the requested introduction.

(7) A secondary water undertaker is not required by this section to
25provide a supply of water to L1, L2 or R if providing the supply of
water would—

(a) require the secondary undertaker, in order to meet all its
existing obligations to supply water for domestic or other
purposes, together with its probable future obligations to
30supply buildings and parts of buildings with water for
domestic purposes, to incur unreasonable expenditure in
carrying out works, or

(b) otherwise put at risk its ability to meet any of the existing or
probable future obligations mentioned in paragraph (a).

(8) 35A primary water undertaker is not required by this section to permit
the introduction of water into its supply system, or to take any steps
to enable such an introduction of water, if permitting the
introduction of a supply of water would—

(a) require the primary undertaker, in order to meet all its
40existing obligations to supply water for domestic or other
purposes, together with its probable future obligations to
supply buildings and parts of buildings with water for
domestic purposes, to incur unreasonable expenditure in
carrying out works, or

(b) 45otherwise put at risk its ability to meet any of the existing or
probable future obligations mentioned in paragraph (a).

(9) Where—

(a) a request has been made by a water supply licensee to a water
undertaker for the purposes of subsection (1), (2), (3) or (4),
50and

(b) the steps which the undertaker is required to take by virtue
of that request include steps for the purpose of obtaining any

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necessary authority for, or agreement to, any exercise by it of
any of its powers or the carrying out by it of any works,

the failure of the undertaker to acquire the necessary authority or
agreement does not affect the liability of the licensee to reimburse the
5undertaker in respect of some or all of expenses incurred by it in
taking those steps, if the terms and conditions of the section 66D
agreement provide for such liability as regards those steps.

(10) A pipe laid because of subsection (6)(a)(i) is to be regarded as a water
main for the purposes of this Act, subject to any provision to the
10contrary.

(11) For the purposes of this section, a water undertaker is the primary
water undertaker of a water supply licensee if the undertaker’s
supply system is to be used for the purpose of making the supply to
the premises mentioned in subsection (1), (2), (3) or (4).

2 15After section 66C (substituted by paragraph 1) there is inserted—

66CA Determinations by Authority

(1) The Authority may determine, in a case referred to it by a water
supply licensee, whether any condition specified in the following
provisions is satisfied—

(a) 20section 66A(5) and (6);

(b) section 66AA(5) and (6);

(c) section 66B(5);

(d) section 66C(7) and (8).

(2) Before the Authority determines whether a condition specified in
25section 66B(5) is satisfied, it must consult the Secretary of State.

(3) If a determination as to a condition specified in section 66B(5) relates
to the introduction of water into the supply system of a water
undertaker whose area is wholly or mainly in Wales, the Authority
must consult the Welsh Ministers, not the Secretary of State.

(4) 30Before the Authority determines whether a condition specified in
section 66C(7) or (8) is satisfied, it must consult the Secretary of State
and the appropriate agency.

(5) If the case in which a determination as to a condition specified in
section 66C(7) or (8) is made relates to—

(a) 35the supply of water by a water undertaker whose area is
wholly or mainly in Wales, and

(b) the introduction of water into the supply system of a water
undertaker whose area is wholly or mainly in Wales,

the Authority must consult the Welsh Ministers, not the Secretary of
40State.

(6) If the case in which a determination as to a condition specified in
section 66C(7) or (8) is made relates to the supply of water by one
water undertaker, and the introduction of water into the supply
system of another water undertaker, and only one of those
45undertakers has an area wholly or mainly in Wales, the Authority
must consult the Welsh Ministers as well as the Secretary of State.

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(7) In subsection (4), “the appropriate agency”, in relation to a
determination as to a condition specified in section 66C(7) or (8)
relating to the supply of water by one water undertaker, and the
introduction of water into the supply system of another water
5undertaker means—

(a) the Environment Agency, in a case where the areas of both
undertakers are wholly in England;

(b) the NRBW, in a case where the areas of both undertakers are
wholly in Wales;

(c) 10both the Environment Agency and the NRBW, in any other
case.

3 For section 66D of the Water Industry Act 1991 (determinations and
agreements) there is substituted—

66D Agreements as to duties under sections 66A to 66C

(1) 15On the application of—

(a) a water supply licensee that has made a request under
sections 66A to 66C, or

(b) a water undertaker to which such a request has been made,

the Authority may by order require a water undertaker to perform
20the duty in question under sections 66A to 66C, for such period and
on such terms and conditions as may be specified in the order.

(2) The Authority may make an order under subsection (1) only if—

(a) in the case of an application relating to a duty under section
66A, 66AA, 66B or 66C, it appears to the Authority that the
25water undertaker is required to perform that duty under that
section, or

(b) in the case of an application relating to duties under section
66C, it appears to the Authority that both water undertakers
in question are required to perform duties under that section,

30and it is satisfied that the parties cannot reach agreement within a
reasonable time.

(3) An order under subsection (1) has effect as an agreement between—

(a) the water supply licensee, and

(b) the water undertaker required to perform the duty in
35question.

(4) On the application of a party to a section 66D agreement, and if the
Authority is satisfied that the parties cannot reach agreement on the
variation or termination of the agreement within a reasonable time,
the Authority may by order vary or terminate the agreement.

(5) 40If an order under subsection (4) is made in relation to a section 66D
agreement, the agreement—

(a) has effect subject to the provision made by the order, or

(b) ceases to have effect, as the case may be.

(6) An order under subsection (4) may require one party to the
45agreement to pay compensation to the other.

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(7) Neither the CMA nor the Authority may exercise, in respect of an
agreement for the performance of a duty under sections 66A to 66C
by a water undertaker, the powers conferred by—

(a) section 32 of the Competition Act 1998 (directions in relation
5to agreements);

(b) section 35(2) of that Act (interim directions).

(8) Subsection (7)(b) does not apply to the exercise of powers in respect
of conduct—

(a) which is connected with an agreement for the performance of
10a duty under sections 66A to 66C by a water undertaker, and

(b) in respect of which section 35(1) of the Competition Act 1998
applies because of an investigation under section 25 of that
Act relating to a suspected infringement of the Chapter 2
prohibition imposed by section 18(1) of that Act.

(9) 15In this Chapter a reference to a section 66D agreement is a reference
to—

(a) an agreement for the performance of a duty under sections
66A to 66C by a water undertaker, or

(b) an order deemed to be such an agreement under subsection
20(3), or

(c) an agreement varied by order under subsection (4).

4 After section 66D of the Water Industry Act 1991 (as substituted by
paragraph 3) there is inserted—

66DA Codes in respect of section 66D agreements

(1) 25The Authority may issue one or more codes in respect of section 66D
agreements.

(2) A code may make provision about—

(a) procedures in connection with making a section 66D
agreement;

(b) 30procedures in connection with varying or terminating a
section 66D agreement;

(c) the terms and conditions of a section 66D agreement,
including terms as to the duration of such an agreement;

(d) principles for determining the terms and conditions that
35should or should not be incorporated into a section 66D
agreement.

(3) A code may make provision about the steps to be taken by the
Authority in determining for the purposes of section 66D(2) whether
a water undertaker is, in the particular case, required to perform a
40duty under sections 66A to 66C.

(4) If the Authority considers that a water undertaker or a water supply
licensee is not acting as required by a code, the Authority may give
the undertaker or the licensee a direction to do, or not to do, a thing
specified in the direction.

(5) 45The Authority may not give a direction under subsection (4)
requiring a person to enter into, vary or terminate an agreement.

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(6) It is the duty of a water undertaker or a water supply licensee to
comply with a direction under subsection (4), and this duty is
enforceable by the Authority under section 18.

(7) A code may make—

(a) 5different provision for different persons or descriptions of
person;

(b) different provision for different duties under sections 66A to
66C.

(8) The Authority may from time to time review a code issued under this
10section and issue a revised code.

(9) A revised code may include provision for applying any of its
revisions to section 66D agreements made before the revised code
comes into effect.

66DB Codes under section 66DA: procedure

(1) 15Before issuing a code under section 66DA, the Authority must—

(a) prepare a draft of the code proposed to be issued;

(b) consult persons in accordance with subsections (2) to (4).

(2) If the proposed code relates to section 66D agreements made with
water undertakers whose areas are wholly or mainly in England, the
20Authority must consult the following about the proposed code—

(a) the Secretary of State;

(b) the Chief Inspector of Drinking Water;

(c) the Council;

(d) any relevant undertakers likely to be affected by the
25proposed code;

(e) any water supply licensees likely to be affected by the
proposed code;

(f) such other persons as the Authority thinks appropriate.

(3) If the proposed code relates to section 66D agreements made with
30water undertakers whose areas are wholly or mainly in Wales, the
Authority must consult the following about the proposed code—

(a) the Welsh Ministers;

(b) the Chief Inspector of Drinking Water for Wales if there is
one, or the Chief Inspector of Drinking Water if section
3586(1B)(b) applies;

(c) the Council;

(d) any relevant undertakers likely to be affected by the
proposed code;

(e) any water supply licensees likely to be affected by the
40proposed code;

(f) such other persons as the Authority thinks appropriate.

(4) The Authority must specify the period (“the consultation period”)
within which a person may make representations about the
proposed code.

(5) 45Before a code under section 66DA prepared by the Authority is
issued, the Minister may direct the Authority—

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(a) not to issue the code, or

(b) to issue the code with specified modifications.

(6) Subsection (5) is subject to subsections (8) and (9).

(7) In subsection (5) “the Minister” means—

(a) 5the Secretary of State, so far as a code prepared by the
Authority relates to section 66D agreements affecting only
the supply systems of water undertakers whose areas are
wholly or mainly in England;

(b) the Welsh Ministers, so far as a code prepared by the
10Authority relates to section 66D agreements affecting only
the supply systems of water undertakers whose areas are
wholly or mainly in Wales;

(c) the Secretary of State and the Welsh Ministers acting jointly,
so far as a code prepared by the Authority relates to section
1566D agreements not falling within paragraph (a) or (b).

(8) If the power under subsection (5) is exercised to give a direction in
respect of such section 66D agreements as are referred to in
paragraph (a), (b) or (c) of subsection (7), it may not be exercised
again in respect of such section 66D agreements as are referred to in
20that paragraph.

(9) If the power under subsection (5) to give a direction in respect of
such section 66D agreements as are referred to in paragraph (a), (b)
or (c) of subsection (7) is not exercised on the first occasion on which
it may be so exercised, it may not be exercised in respect of such
25section 66D agreements as are referred to in that paragraph on a later
occasion.

(10) A direction under subsection (5) must be given within the period of
28 days beginning with the day after the end of the consultation
period, and a code prepared by the Authority in relation to which a
30direction may be given may not be issued before that period of 28
days has expired.

(11) This section is subject to section 66DC.

66DC Codes under section 66DA: minor or urgent revisions

(1) This section applies if the Authority proposes to issue a revised code
35and, in the view of the Authority, the revision or each of the revisions
proposed to be made is—

(a) a revision for which consultation is unnecessary, or

(b) a revision that it is necessary or desirable to make without
delay.

(2) 40Section 66DB does not apply to the proposed revised code.

(3) Once the Authority has issued the revised code, it must give notice
as soon as reasonably practicable of—

(a) the issuing of the revised code, and

(b) as regards each revision contained in it, whether in the view
45of the Authority the revision falls within paragraph (a) or (b)
of subsection (1).

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(4) Notice under subsection (3) is to be given to such persons as the
Authority considers appropriate.

(5) Unless the Authority gives notice that a revision in a revised code is
in the view of the Authority a revision falling within subsection
5(1)(a), the revision ceases to have effect at the end of the period of six
months beginning with the day after that on which the revised code
is issued.

5 For section 66E of that Act there is substituted—

66E Rules about charges

(1) 10The Authority must issue rules about charges that may be imposed
by a water undertaker under a section 66D agreement.

(2) The rules may in particular make provision about—

(a) the types of charges that may be imposed;

(b) the amount or the maximum amount, or methods for
15determining the amount or maximum amount, of any type of
charge;

(c) principles for determining what types of charges may or may
not be imposed;

(d) principles for determining the amount of any change that
20may be imposed.

(3) The rules must include provision for and in connection with
requiring a water undertaker to impose on a water supply licensee
only such charges as would enable the licensee, where the services it
provides to a person under its retail authorisation or restricted retail
25authorisation are services to which a section 142(2)(b) agreement
would apply if the undertaker had continued to provide the services,
to charge for those services at the same rate or rates as would have
applied if the section 142(2)(b) agreement had applied.

(4) In subsection (3) “section 142(2)(b) agreement” means an agreement
30to which section 142(2)(b) applies.

(5) If the Authority considers that a water undertaker is not acting as
required by rules under this section, the Authority may—

(a) give the undertaker a direction to do, or not to do, a thing
specified in the direction, or

(b) 35in a case where a section 66D agreement to which the
undertaker is party requires modification in order to conform
to the rules, give a direction to the undertaker and the water
supply licensee in question to modify the agreement.

(6) It is the duty of a water undertaker or a water supply licensee to
40comply with a direction under subsection (5), and this duty is
enforceable by the Authority under section 18.

(7) The rules may—

(a) make different provision for different persons or descriptions
of person;

(b) 45make different provision for different purposes;

(c) make provision subject to exceptions.

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(8) The Authority may from time to time review rules issued under this
section and issue revised rules.

(9) Revised rules may include provision for applying any of their
revisions to section 66D agreements made before the revised rules
5come into effect.

66EA Rules about charges: provision about the reduction of charges

(1) Rules under section 66E may make provision about the reduction of
charges payable under a section 66D agreement where—

(a) a water supply licensee that has a retail authorisation or a
10restricted retail authorisation is party to the section 66D
agreement, and

(b) other conditions specified by the rules are satisfied.

(2) Rules made by virtue of subsection (1) may in particular—

(a) specify conditions relating to any party to the section 66D
15agreement;

(b) specify conditions about persons taking steps for the purpose
of reducing or managing water consumption;

(c) specify conditions about the premises by reference to which
such steps are to be taken;

(d) 20specify conditions about reducing charges payable by a
person who—

(i) is not party to the section 66D agreement, and

(ii) takes or proposes to take such steps as satisfy or
would satisfy a condition specified under paragraph
25(b).

(3) The rules may provide that, where a charge falls to be reduced in
accordance with rules made by virtue of subsection (1), the water
undertaker to which the charges are payable must give notice of that
reduction to the Authority.

(4) 30Rules made by virtue of subsection (3) may—

(a) make provision as to the content of the notice;

(b) specify the period within which an undertaker is to give
notice to the Authority.

(5) Provision under subsection (4)(a) may in particular require the notice
35to specify—

(a) the amount of the charge, with and without the reduction;

(b) the period for which the reduction has effect.

66EB Rules under section 66E: procedure

(1) Before issuing rules under section 66E, the Authority must—

(a) 40prepare a draft of the proposed rules, and

(b) consult the relevant persons about the draft.

(2) The relevant persons are—

(a) the Secretary of State;

(b) the Welsh Ministers;

(c) 45the Council;

Water BillPage 109

(d) any water undertakers likely to be affected by the rules;

(e) any water supply licensees likely to be affected by the rules;

(f) such other persons as the Authority thinks appropriate.

(3) The Authority must specify the period (“the consultation period”)
5within which persons may make representations about the proposed
rules.

(4) The Authority must have regard to guidance issued under section
66EC in preparing rules under section 66E.

(5) Before rules under section 66E prepared by the Authority are issued,
10the Minister may direct the Authority—

(a) not to issue the rules, or

(b) to issue the rules with specified modifications.

(6) In subsection (5) “the Minister” means—

(a) the Secretary of State, so far as rules prepared by the
15Authority relate to section 66D agreements affecting only the
supply systems of water undertakers whose areas are wholly
or mainly in England;

(b) the Welsh Ministers, so far as rules prepared by the Authority
relate to section 66D agreements affecting only the supply
20systems of water undertakers whose areas are wholly or
mainly in Wales;

(c) the Secretary of State and the Welsh Ministers acting jointly,
so far as rules prepared by the Authority relate to section 66D
agreements not falling within paragraph (a) or (b).

(7) 25A direction under subsection (5) must be given within the period of
28 days beginning with the day after the end of the consultation
period, and rules may not be issued before that period of 28 days has
expired.

66EC Rules under section 66E: guidance

(1) 30Guidance as to the content of rules under section 66E must be issued
by—

(a) the Secretary of State, in relation to section 66D agreements
affecting only the supply systems of water undertakers
whose areas are wholly or mainly in England, and

(b) 35the Welsh Ministers, in relation to section 66D agreements
affecting only the supply systems of water undertakers
whose areas are wholly or mainly in Wales.

(2) Guidance as to the content of rules under section 66E may be issued
by the Minister in relation to other section 66D agreements.

(3) 40Before issuing the guidance, the Minister must—

(a) prepare a draft of any proposed guidance;

(b) consult the relevant persons about the draft.

(4) The relevant persons are—

(a) the Secretary of State;

(b) 45the Welsh Ministers;

(c) such other persons as the Minister thinks appropriate.

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